Extreme weather in China is becoming the latest challenge to global supply chains as a strong typhoon season threatens to further delay goods stuck at some of the world’s busiest container ports.
The port of Yantian in Shenzhen, an industrial and export hub in southern China, temporarily halted container unloading services Tuesday night due to a typhoon warning. Just two weeks earlier, Shanghai’s Yangshan mega terminal and nearby ports evacuated ships when Typhoon In-Fa hit the coast, causing widespread flooding and overturning containers stowed in the hold of a bulk carrier traveling to the United States.
Torrential rains, high winds and flooding this year are clogging global trade as the already overstretched shipping sector struggles to recover from disruptions ranging from Covid-19 outbreaks to geopolitical unrest. And the worst may be yet to come, with authorities forecasting more typhoons in China this month.
Between August and December, 16 to 18 typhoons are forecast to form in the northwest Pacific and South China Sea, the Meteorological Administration said Wednesday. Four to six of them are expected to make landfall in China or affect the country.
“Every time a port is forced to close, containers continue to pile up, adding to existing delays,” said Alex Hersham, CEO of digital shipping company Zencargo. “And with this season expected to be stronger than usual for tropical cyclones, we can expect more delays like this.”
Supply chains have faced a string of bad luck this year. An outbreak of Covid-19 among port staff was to blame for the partial closure of Yantian in May, causing container goods to back up for a month. As ships were diverted from southern China, some factories in the nearby manufacturing hub of Guangdong closed due to excess inventory that could not be exported, according to analysts and logistics intelligence firm project44.
“The impact of the Yantian shutdown is unprecedented in the supply chain because it serves one of the largest manufacturing bases in the world,” said Salmon Aidan Lee, head of polyesters at consultancy Wood Mackenzie Ltd. “If we get a few more typhoons and they bring production down a few days at a time, this problem will get worse.”
Although the average waiting time for exporting a container at Yantian has dropped to five days from June 25, and operations resumed at the port Wednesday night, the situation could easily worsen again if weather-related delays at other Chinese ports pile up, Hersham said.
Typhoon In-Fa also affected factory operations in eastern China, while major ports along the Yangtze River, the country’s busiest inland waterway, halted operations last week, the Shanghai Shipping Exchange said in a July 30 note. Torrential rains and flooding have affected commodity flows such as oil and coal, the company said.
According to shipping consultant Drewry, the disruptions are driving the cost of shipping a 40-foot box from China to the United States to record levels, above $10,000. Ultimately, the disruptions will add to inflation, said Lee, who predicts U.S. consumers will have to pay about 20% more for Christmas gifts, from toys to furniture. (He adds the weather agency’s typhoon forecast in the fourth paragraph).
